Are Chevrolet's New Carbon Offsetting Projects the Best CSR $40M Can Buy?

Chevrolet announced on Friday it is helping support 16 carbon offsetting projects across America – from biomass to wind turbines – as part of its commitment to spend up to $40 million on reducing 8 million tons of carbon over the next five years. This offsetting goal, which the company announced last year, is based on the estimated emissions from driving the 1.9 million vehicles Chevrolet is expected to sell in 2011 in the U.S.

Chevrolet made an interesting choice deciding to focus such a major CSR initiative on carbon offsetting. Even if you ignore for a minute the ongoing debate on the value of carbon offsetting, there’s still a big question mark on the value of such an initiative for Chevrolet. Is it really a valuable CSR plan that would benefit the company and will be appreciated by customers, or just another example of non-strategic CSR that wastes shareholders’ money? There are couple of indicators that might suggest the latter is more likely.

Why? Let’s try to look at it from the perspectives of the company, the program and the customers. Let’s start with the company. I have no idea what got Chevrolet to choose carbon offsetting over all the many other options available to “do more, today” as they say it on their website. On their Q&A page Chevrolet mentions it is doing it because the company feels “it the right thing to do. This program is an additional way to make a positive impact on the environment.” What it doesn’t mention is that this program doesn’t seem to be making any sort of positive impact on Chevrolet.

Just like the example of Google’s investment in affordable housing in Allston, MA this is another example of a CSR program that provides at best only societal benefits, without any strategic impact on the company. These carbon offsetting projects, from biomass to wind turbines, not only have nothing to do with Chevrolet’s core business (i.e. selling cars), they also don’t change anything in Chevrolet’s operations or its products. Basically, all the company is doing here is opening its checkbook and writing a big check for 16 projects.

Chevrolet and GM actually know better. For example, more than half of GM’s manufacturing plants worldwide are landfill-free. Also, as we wrote here on July, Chevrolet division announced then it will install solar-powered electric vehicle charging stations for its Volt vehicles at dealerships across North America. The Green Zone initiative, as this program is called will generate electricity equivalent to 12 full vehicle charges per day and excess electricity created will help supplement the dealership’s power needs. Both examples show you GM and Chevrolet know very well how to identify and pursue a strategic win-win approach, benefiting both the company and the environment.

From a ‘product’ perspective, Chevrolet made a choice to invest $40 million in a product that many find questionable and problematic. Chevrolet got a reminder of that with regards to the first project it has been investing in - the weatherization of up to 5,500 low-income homes in Maine. According to Bloomberg, Chevrolet is paying almost $750,000 to bolster a state program in Maine that insulates homes for low-income families. The investment is relatively small given it is a $50 million project, mostly funded by a grant from the federal stimulus plan, yet Chevrolet is receiving credits for 45,738 tons worth of reduced carbon - the total savings Maine expects through 2014 from weatherizing all the 5,500 homes in the program.

Chevrolet’s claim was verified by a new protocol from Verified Carbon Standard. This protocol allowed Maine to sell credits equivalent to the entire project's savings, even to a small investor like Chevrolet, despite the fact that the project did not depend on this investment. This kind of practice is exactly why carbon offsetting comes under fire, so it’s no wonder Chevrolet was criticized about it. For example, Prof. Michael Wara from Stanford Law School said Chevy’s claim lacks credibility and added “it looks like a deceptive marketing claim.”

Last but not least is the customers’ perspective. Does this initiative at least help to green up the Chevrolet brand? It’s difficult to say, but my guestimation is that chances are slim. First, customers many times just don’t understand carbon offsetting programs and their benefits, as was the case with Eurostar for example. Also, customers can’t really feel or see these initiatives, so unlike the Green Zone program in Chevrolet’s dealerships, this initiative cannot really serve as a billboard of Chevrolet’s commitment to the environment. Finally, this initiative won’t change anything in the product Chevrolet is selling or in the company’s practices, so it’s difficult to see how it will change customers’ perception of the company.

Only time will tell and I might be wrong, but my feeling is that Chevrolet could have find much better ways to spend $40 million on a CSR program that will benefit both the environment and the company.

Image credit: opacity, Flickr Creative Commons

Raz Godelnik is the co-founder and CEO of Eco-Libris, a green company working to green up the book industry in the digital age. He is also an adjunct professor in the University of Delaware’s Alfred Lerner College of Business and Economics.